Grey Food Ltd is an Australian listed company that distributes soft and easily digestible food to nursing homes. Charles is the chief executive officer and Camilla is the company secretary. The board of directors additionally comprises June, Julia, and Augusta. June is Charles's favourite niece who is in her first year of university and lacks qualifications. Julia has degrees in business and nutrition. Augusta has a background in mature-aged food sales and was appointed due to her good contacts, despite having previously been on a company board involved in food fraud and convicted of this serious offence. While Charles is generally in control of the company's affairs, he regularly consults his only sister Juan who is considered the "brains of the family". He recently heeded her advice to omit from the company's annual report the details of the executive officers' generous remuneration so that the matter would not cause a stir.

The board becomes aware that a supplier used by Grey Food Ltd is charging Grey Food Ltd three times more for mature-aged food products than what it is paying manufacturers for them. Charles asks Parker, who works at the head office of Grey Food Ltd and actively participates in board meetings given his extensive knowledge of the company, to find another supplier with smaller margins. Parker suggests Cheap and Nasty Pty Ltd, which offers very competitive prices as it sources some products made using inexpensive child labour in Guatemala. But despite Parker's vote in favour of this option, it is rejected given reputational concerns. Julia then convinces the board to use another supplier, Mature Pty Ltd. Unbeknown to the board, Mature Pty Ltd has just been established by Julia, at the urging of her accountant named Ernst. Mature Pty Ltd buys products from Cheap and Nasty Pty Ltd, then on-sells them to Grey Food Ltd at a marked-up price, making Julia a personal profit. To assuage her guilt, Julia decides to donate this profit to charity.

Julia nevertheless hides the dealings of her new company so well that no one suspects a thing. An exception is Charles, who, in his daily management of the company, notices discrepancies in the paperwork. But his sister persuades him not to worry about what she perceives as mere details.

Parker convinces the board to expand into the baby nutrition market, which also involves soft and easily digestible food. Camilla's brother Bingo, who has a shareholding of 4% in Grey Food Ltd, opposes the decision given the plethora of distributors in the area of baby food. He asks Camilla to change the board's mind or at least arrange an extraordinary general meeting (EGM), but she does not want to disappoint Charles who is incredibly enthusiastic about the idea. So, he decides to organise an EGM himself. Bingo gives members two months' notice that there will be a motion of no-confidence in Parker. The meeting goes ahead and the majority of members, albeit not with a majority of voting shares, decide by show of hands to reverse the decision to expand and to bar Parker from participating in board meetings. Parker then stops attending meetings, but the board continues to execute his idea of expanding the company.

With much of its profit being absorbed by Mature Pty Ltd, Grey Food Ltd starts to become unprofitable. The company's bills exceed its takings, but due to some liquid assets that it has, it can still meet its payments. Camilla is determined to fix things. She re-reads the company's financial documents with heightened attentiveness, discovers Julia's fraudulent transactions, and informs the board who instantly removes Julia as a director and decides to buy products directly from Cheap and Nasty Pty Ltd instead. However, Parker's business idea of expansion causes the company to suffer catastrophic financial losses and it is now unable to keep up with its payments to its suppliers, bank, and employees, though it is still remunerating its directors and paying dividends to its shareholders. Charles does not want to lose the company that he has been building up for years, so he convinces the majority of the board that Grey Food Ltd can "weather the storm" and should continue trading as usual. Augusta argues vociferously against this decision, as she has already been in trouble in her previous directorial role, but is outvoted. She is tempted to resign but decides to stay to receive her director's fees. Soon after, the bank appoints a receiver, and the company goes into liquidation.

1. Are there any issues regarding directorial appointment and disclosure?

2. Have any directors' and officers' duties been breached, and by whom?

3. What if, on his sister's advice, Charles had set up another company into which he transferred some of the assets of Grey Food Ltd when he realised that it was in financial difficulty?

4. Was there minority oppression and were the member meeting procedures followed?

5. How might any remaining assets be divided during liquidation and what could the company have done instead of continuing to trade?